De Grey Mining is back in focus, with the latest talk being that Agnico Eagle has submitted a buyout proposal for the $3.2bn Australian listed gold miner.
De Grey declined to comment on the latest speculation that a proposal went into its offices from Agnico Eagle in recent days.
But it comes after months of talk that Agnico Eagle was focused on the target and wants to make an acquisition.
It’s also come to light that in the past 18 months De Grey has opened a data room for interested parties that may have been suitable for some sort of potential deal, which may have included arrangements such as joint ventures.
Parties were provided sensitive information and signed confidentiality agreements and standstill arrangements were put into place.
DataRoom reported in June that the talk had resurfaced.
De Grey has been the subject of potential takeover activity for more than a year, but its recent $600m equity raising to fund the development of its Hemi gold deposit was thought to have put to rest any suggestion it was embarking on any merger or acquisition talks.
At the Diggers and Dealers conference in Kalgoorlie in August, sources said suitors would want more certainty surrounding its development before making a move.
Others believe now is exactly the right time and a takeover makes sense, because they can influence the outcome of the development, and the talk in the market about Agnico Eagle’s interest has persisted. The Canadian group has been linked to the target as a suitor for at least a year.
De Grey’s shares have rallied this month. The spot gold price has hit record highs this year and was last at $US2665 an ounce. The stock closed at $1.34 with its market value at $3.2bn.
Agnico Eagle owns the Fosterville mine, the largest producer of gold in Victoria. It inherited the asset when it merged with Kirkland Lake and it likes to acquire assets of scale.
De Grey’s mining deposit is of a particularly high grade. The Hemi gold discovery in Western Australia’s Pilbara is capable of producing 10.6 million ounces of gold with capital spending requirements of close to $1bn.
Any buyout proposal would create a major dilemma for Gold Road Resources, which owns a 17.3 per cent stake.
A strategic Gold Road buyer or merger partner could be drawn to the opportunity to have a seat at the table over what happens to De Grey.
Regis Resources has hit a roadblock with its McPhillamys gold mine project in NSW over federal Environment Minister Tanya Plibersek’s move to declare an Indigenous protection order over the project and is understood to have assessed a deal with Gold Road, but talks between the pair ended.
One possibility is that Agnico buys De Grey and the $1.8bn Gold Road. For the year to June, De Grey reported a $17m loss.
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